Exelon, BGE and Pepco were all called to testify in front of Maryland lawmakers on Friday, providing rationale behind expensive electric transmission projects that have drawn community concern in recent months.
The particular project that launched this oversight process is a massive BGE underground transmission line, expected to run through Southern Baltimore neighborhoods like Otterbein and Ridgely's Delight.
“BGE mailed residents in December, announcing that a route would tear up miles and miles of busy roads through historic neighborhoods, densely populated neighborhoods, and there was not a plan for meaningful community engagement to discuss alternatives,” Senate President Bill Ferguson (D-Baltimore City) said at a media availability on Monday.
The project was initially proposed to cost just over $100 million, but that number has since skyrocketed to nearly $500 million – a bill that ratepayers will eventually foot once the project is in service.
BGE Project Manager Michael Argentino — who is overseeing the Port Covington Transmission Project — told members of the Senate Education, Energy and the Environment Committee on Friday that land constraints, engineering and design changes, a compressed construction schedule and inflation are all to blame for the extreme cost escalation.
However, BGE announced it would be pausing the project on Wednesday.
“The pause does not change the underlying reliability needs in this part of the city, but it's a deliberate step to allow us to deepen engagement with local residents,community leaders and incorporate any updated development plans from the Baltimore Peninsula new ownership,” Argentino said.
BGE wants to replace the 70-year-old Gould Street substation in South Baltimore, which Argentino says is at the “end of its useful life capacity.”
“In other words, it poses a serious risk to reliability, and it will not be able to support the forecasted load by mid 2028,” he said. “If development at the Baltimore Peninsula were to stop tomorrow, we would still run into this capacity constraint.”
The proposed underground transmission line would connect the old substation to the Greene Street substation further north.
In addition to the exploding expense of the project, lawmakers and community leaders have taken serious concern with the transparency process around the plan’s approval.
“Baseline” transmission projects go through the state utility regulator for final approval, a body known as the Public Service Commission.
These baseline projects are ordered to be carried out by the regional grid operator — the PJM Interconnection — in order to maintain grid reliability.
While these transmission buildouts are deemed a necessity, there are other electric infrastructure construction requests known as “supplemental” projects.
Also known as “local” projects, these transmission plans are proposed by transmission-owning utilities — like BGE — and are only subject to approval by the Federal Energy Regulatory Commission (FERC).
PJM does review the projects, but they are not reviewed for necessity or cost effectiveness — the grid operator only ensures the project would not harm the grid.
These supplemental projects are often proactive proposals from utility companies to try and replace aging infrastructure before it needs to be replaced, like the Port Covington Transmission Project.
The utility companies argued that the FERC approval process for these types of projects is still transparent, despite a lack of direct state-level oversight, but Ferguson appeared unconvinced.
“I have been truly flabbergasted by how many people have heard of supplemental transmission projects for the first time, even within the organizations that are represented here today,” Ferguson said during the hearing. “And so it's hard to hear that there was transparency in it.”
Ferguson also pointed to data showing that the number of projects in the supplemental category have surged in recent years, and four BGE proposals that were initially expected to cost $373 million are now projected to cost $1.1 billion.
Pepco Vice President of Strategy and Regulatory Affairs Rob Leming argued that although there may appear to be a spike in supplemental projects since 2017, many of these upgrade needs were identified over a decade ago and have been waiting to be approved.
“Substations getting constructed in an urban environment, you know, it takes quite a while in terms of the design, permitting, construction, etc.,” Lemming said.
One reason why lawmakers are so keen on state-level oversight is because the PSC can deny cost recovery when a project is deemed unbeneficial to ratepayers.
Disallowing cost recovery means the utility would have to cover the expense of the project without charging ratepayers for it down the road.
FERC does have the ability to reject cost recovery as well, but BGE Vice President of Strategy and Regulatory Affairs John Frain only provided one non-BGE example of such a rejection to the committee.
Ferguson plans to introduce legislation that would require all transmission projects to go through the PSC, mandating utility companies justify the need and cost of these types of infrastructure projects at the state level.
The oversight hearing did not result in any immediate action, but Ferguson said a “deeper dive” will be needed as lawmakers decide how to tackle rising energy bills this legislative session.
